Fed's Warsh sees US resilience, mum on rate-path view

Warsh said he would not prejudge upcoming Fed meetings or say whether more rate hikes would be needed. He referred to the Fed’s September rate hike and said it had removed a dose of monetary accommodation. Markets were betting the Fed would wait until December to raise rates, despite recent inflation readings coming in higher than expected.

Warsh said investment driven by artificial intelligence was broadening to other sectors and creating a near-term demand shock that put upward pressure on inflation. He described AI’s path to faster productivity growth as “very bumpy,” saying its effect was hitting demand before supply. A Fed task force on AI’s impact on productivity and jobs will hold a field hearing in the San Francisco Bay Area on November 16.

Warsh said broader investment was providing tailwinds for US growth, and described global economies as more resilient than he had expected given geopolitical tensions and energy shocks. He said he was optimistic that the United States would emerge with a more durable economy and greater capacity to lead global growth.